The AI Investing Pulse

November 13th, 2025

In this Week’s Edition:

1. Analysis - 3 Small-Cap AI Surges as Big Tech Faces ‘Big Short’ Scrutiny

2. Stock Ideas - The Stock that could be a mini-Palantir  

3. News - Nebius vs CRWV: which AI stock is stronger?

4. Startups - Wonderful secures $100m Series A to scale AI agents

5. Trends - AI and renewables reshaping global energy

6. Other News - Even AI CEOs admit they’re a little scared

3 Small-Cap AI Surges as Big Tech Faces ‘Big Short’ Scrutiny

This week we are looking at three companies with market caps below $10B that delivered standout performance despite heightened macro scrutiny and weakness across major AI hyperscalers.

While the broader sector faced pressure from renewed concerns over valuation discipline and accounting transparency, the application layer proved notably resilient. All three highlighted names, JFrog, BigBear.ai, and Appian, reported strong Q3 earnings or raised guidance.

AI Market Under Pressure

The AI market came under renewed pressure this week as macro sceptics challenged the valuation discipline and accounting transparency of major industry players. Michael Burry, famed for predicting the 2008 financial crisis, intensified concerns by questioning the depreciation practices of large AI hyperscalers. He argues that companies such as Oracle and Meta Platforms are extending the useful life of chips and servers beyond their realistic two- to three-year cycles, potentially understating depreciation and inflating earnings by as much as 27% and 21% respectively by 2028.

This renewed scrutiny contributed to sell-offs in several large-cap names, including Palantir and Nvidia, both of which Burry has taken short positions on, and amplified volatility across the hyperscaler segment. Yet, despite the broader pressure, a number of smaller, high-growth application-layer companies broke out meaningfully during the week.

🚀 Three Application Stocks Breaking Out Despite Headwinds

While hyperscalers faced tough scrutiny, three companies in the Application & Edge layer delivered robust results and standout weekly performance.

1. JFrog Ltd. $FROG ( ▲ 0.23% )  

🧠 What the Company Does

JFrog enables automated DevOps and the secure delivery of software and AI applications, providing the backbone for enterprise-scale deployment workflows. Its platform manages the entire lifecycle of application components from code to production. JFrog helps enterprises reduce operational friction, accelerate release cycles, and maintain consistent performance across distributed environments.

💡 Why It Stands Out

JFrog gained 30.5% during the week following a strong Q3 earnings beat and its third consecutive guidance raise. The results reflect a highly effective go-to-market strategy and accelerating demand for AI-driven DevOps capabilities. Margin improvements over the past year highlight the scalability of its model, and with the company already free cash flow positive. According to some analysts, these trends resemble Palantir’s 2022 inflection point, suggesting that FROG may be entering a similar re-rating phase, one that the market has yet to fully appreciate.

2. BigBear.ai $BBAI ( ▼ 1.47% )  

🧠 What the Company Does

BigBear.ai develops AI-powered analytics and decision intelligence tools for defence and national security, enabling agencies to process complex data, anticipate threats, and make faster, more informed operational decisions.

💡 Why It Stands Out

BigBear.ai surged more than 17% after beating Q3 revenue and earnings expectations and announcing a transformative $250 million acquisition of Ask Sage. The quarter delivered stronger-than-expected revenue, a sharply narrowed net loss, and raised full-year guidance, prompting renewed institutional interest. The Ask Sage acquisition adds meaningful recurring revenue and expands BigBear.ai’s defence-focused AI footprint, reinforcing the company's emerging reputation as a “mini-Palantir” positioned to capture a growing share of major defence modernisation spending.

3. Appian Corporation $APPN ( ▼ 0.06% )  

🧠 What the Company Does

Appian provides a low-code automation platform that enables enterprises to embed AI into mission-critical processes, helping teams build, integrate, and optimise workflows with minimal coding. By unifying data, automation, and process orchestration, Appian accelerates the deployment of AI-driven applications, improves operational efficiency, and supports faster, more informed decision-making across complex enterprise environments.

💡 Why It Stands Out

Appian surged 19% over the last week following an upbeat Q3 performance. The company continues to demonstrate high financial quality and a solid growth outlook, supported by improving profitability trends and sustained demand for its automation platform. Appian continues to stand out as a leading Fundamental Candidate within the enterprise automation space.

Final Take

This week highlighted a clear split within the AI sector. While hyperscalers faced mounting scrutiny over valuation and accounting practices, smaller application-layer companies with tangible earnings strength and improving fundamentals outperformed decisively. JFrog, BigBear.ai, and Appian each delivered strong Q3 results, rising guidance, or transformative strategic actions and the market responded accordingly.

However, after such sharp weekly gains, it is worth monitoring the potential for near-term overextension, particularly for FROG and APPN, as both charts now reflect extended moves and the markets remain sensitive to macro headwinds.

Thank you for taking the time to read this week’s edition, until next week.

This Week’s Top AI Stocks

If you’d like access to this week’s top AI stock identified by our AIIP methodology, the full breakdown is available exclusively in this week’s premium report.

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_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

^{About AIIP - The AIIP Index tracks 173 AI-focused public companies across the full AI stack, serving as our benchmark for sector performance. All scores are proprietary and calculated using data from Finbox (powered by S&P Global Intelligence). AIIP Total Score (0–100) combines metrics for sales and EPS growth, financial quality, and valuation to assess overall business strength. AIIP Relative Strength (RS) Score measures a stock’s price performance relative to the AIIP 173 AI stocks. Ranking Status is based on score combinations: Fundamental: Total Score ≥ 70, RS < 80. Momentum: RS ≥ 80, Total Score < 70. Watchlist: Total Score ≥ 70 and RS ≥ 80}

TOP AI STOCKS PERFORMANCE

TOP AI ETFs PERFORMANCE

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AI STOCKS IDEAS

The Stock that could be a mini-Palantir - stock jumps after defence deal – MSN

Meet the newest AI 5 for 1 stock split in S&P 500 – The Motley Fool

Quantum computing: three stocks to watch – Yahoo Finance

AI STOCKS & ETFs NEWS

Nebius vs CRWV: which AI stock is stronger? – Markets.com
A comparative analysis of Nebius (NBIS) and CRWV assesses which company offers better performance and growth potential in the evolving AI sector.

JPMorgan warns of AI stock correction – Business Insider
JPMorgan cautions that overvalued AI stocks could face a correction reminiscent of the dot-com bubble, highlighting risks tied to debt and inflated expectations.

JFrog Q3 outlook driven by cloud and security demand – TradingView
JFrog’s Q3 revenue climbed 25.5% year-over-year to $136.9 million, surpassing forecasts and signalling continued momentum in cloud and cybersecurity solutions.

AI rally pauses amid market uncertainty – Yahoo Finance UK
The AI-led rally has temporarily cooled after a 43% surge since April, though analysts maintain confidence in long-term sector growth.

AI STARTUPS

Wonderful secures $100m Series A to scale AI agents – Business Review
Wonderful raised $100 million in Series A funding to expand its enterprise AI agents globally, focusing on growth in APAC and LATAM following a $34 million seed round.

How AI is revolutionising HR for fintech startups – OneSafe
Fintech startups are leveraging AI to optimise hiring and employee engagement while maintaining fairness and ethical standards in HR processes.

AI TRENDS

IEA: AI and renewables reshaping global energy – Electrek
The IEA highlights how AI will accelerate electricity demand from data centres by 2030, urging investments in renewables and infrastructure to balance growth with sustainability.

Google vs LLMs: the future of search – IMD
The battle for search dominance intensifies as AI-driven search tools challenge Google’s market share, reshaping the future of online information and advertising.

Eight AI ethics trends shaping 2026 – Bernard Marr
Emerging AI ethics trends will drive greater transparency, accountability, and trust in 2026, influencing both global regulation and industry standards.

OTHER

Even AI CEOs admit they’re a little scared – AdExchanger
Tammy Nam, CEO of The Brief, acknowledges public scepticism of AI in marketing but stresses its power to enhance creativity and efficiency when applied responsibly.

Cybersecurity in the age of AI and quantum – MIT Technology Review
AI and quantum computing are reshaping cybersecurity, driving innovations in encryption and defence strategies to counter increasingly sophisticated threats.

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_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice. Data sources: S&P Global Market Intelligence}